State Bank of India vs Delhi Public School

A.K. Sikri, J.—The rapidly growing Indian economy has led to accelerated upward mobility of different sections of the population. This tend, in its turn, has created greater awareness among people about the quality dimension of school education along with higher levels of aspiration. In an educational set up that is divided between a fast-growing private sector participation and a much larger public or state sector, the issue of quality assumes great complexity. There is a widely prevalent belief that many of the state-run schools are not always as good as several of the private schools, particularly in urban areas. All these factors have contributed to a phenomenal increase in the demand for admission to ''quality'' schools. In this context the craze for admission to private schools that are perceived as better options by the parents has created an anomalous situation where the number of applicants far exceeds the number of seats available in these schools. Obviously, when admission seekers outnumber the seats meant for admission, all kinds of attempts are made by the parents of these students to get entry into good schools. This takes us to the fundamental issue about why right from the kindergarten up to the professional colleges; there exist a need for donation and so much of commercialization. After all, primary and thereafter secondary education in a school lays the foundation for a student to get into good academic institutions for higher education and in turn make ones career. Therefore, everything is at stake for parents in the process of getting admission of their children in good schools. This is the main reason for so much litigation in this field. This is the reason that attempts are made to streamline the admission process with averred objective to determine and lay down rationale criteria for admission. It is a common knowledge that as a result of directions given by this Court in a PIL in Delhi, Ganguly Committee was appointed to formulate proper guidelines for admission of the children in the schools, though notwithstanding the Ganguly Committee Report the litigation continues.

Instant case is a classical example which depicts such desperation on the part of not only the parents but the employer of the parents as well. The employer in the instant case is the State Bank of India (hereinafter referred to as the ''SBI''). It wanted that wards of its officers/officials get admission in the respondent school, namely, DPS-R.K. Puram, New Delhi (hereinafter referred to as the ''DPS''). For this welfare step for its officers/officials and their wards, the SBI (appellant herein) agreed to donate and in fact, donated a sum of Rs. 18 lakhs to the DPS (respondent herein). This money was given in two installments way back in the year 1983. An agreement dated 26.10.1983 was entered into between the SBI and the DPS. Under this agreement, the DPS agreed to reserve 150 seats (100 for day scholars and 50 for boarders) for the wards of officers/officials of the SBI. These were to be filled up equally in five academic years commencing from July 1983. It was also agreed that if in any academic year the reserve seats could not be utilized fully, the unutilized seats would be made available in the subsequent academic year. To ensure proper implementation of this agreement, the DPS even agreed to associate a member of the SBI in its Selection Committee for selecting the students sponsored by the SBI. Letter dated 14.10.1983 was written by the DPS to the SBI in this behalf. In this letter, it was further agreed to even condone 5% marks in the admission criteria to accommodate the sponsored students. To abide by the agreement to the hilt, the DPS even agreed that whenever any vacancy would arise during an academic session, that would first go to the wards of the officers/officials of the SBI. However, things did not move as intended. According to the SBI, the DPS did not give admission to 150 students as agreed in the agreement dated 26.10.1983. Very few students were admitted. Legal notice dated 11.7.1995 was given by the SBI to the DPS, but in vain. According to the SBI, the DPS did not concede to the demand contained in that notice for giving admission to its sponsored students. Therefore, the SBI filed suit in the District Court, Delhi in the year 1998, which was marked to an Additional District Judge. As the suit was not decided and kept pending for seven years, the same was assigned to Fast Track Court presided over by Sh. Pawan Kumar Jain, Additional District Judge, Delhi, in the year 2006 and was re-numbered as Suit No. 188/2006. The learned ADJ has disposed of this suit after trial, which has culminated into the judgment and decree dated 9.10.2006 and has dismissed the suit. Feeling aggrieved, the said judgment is impugned in this appeal.

We may point out that the DPS had contested the suit by contending that it had performed its part of the contract by admitting 210 students sponsored by the SBI against the agreed reserved seats of 150. Therefore, as per the DPS, 60 students in excess were given admission. It was also their case that agreement was signed in the year 1983, which was for a period of five years and as the said contractual period had lapsed, the agreement had become non est and therefore, could not be enforced. Plea was taken that suit was time-barred as well and was not even filed by the authorized person. It was also the contention of the DPS that in any case, such an agreement was non-enforceable and even opposed to public policy.

The learned trial court has recorded findings that the SBI could not place on record any proof to the effect that suit was filed by a competent person. The learned Judge has also held that suit is barred by limitation. He has also returned the findings to the effect that the agreement in question was not lawful one and was opposed to public policy, hence hit by Section 23 of the Indian Contract Act, Notice to show cause why the appeal be not admitted was issued on 12.3.2007 and trial court record was also summoned. The matter was heard on the basis of trial court record. Learned counsel for the appellant could not surmount the first hurdle itself, as he could not point out as to how the suit filed was within the period of limitation. Admittedly, agreement dated 23.10.1983 was for a period of five years, i.e. the DPS had agreed to reserve 150 seats for the wards of the officers/officials of the SBI, which were to be filled up equally in five academic years commencing from July 1983. Purport of this agreement, thus, was that 30 seats were to be year marked for the SBI sponsored admission seekers, who were to be the children of the officers/officials of the SBI. According to the SBI, the DPS was admitting lesser students. If this was so, cause of action arose at that time. Suit was filed on 3.3.1998. Even if we go by the averments made in the plaint, the suit is highly belated and hopelessly time-barred. It is alleged in the plaint that the DPS was not giving information about the students admitted. In para 19 of the plaint, averment is made that the defendant school had not furnished the requisite information to the plaintiff bank after 21.10.1992. In para 20, it is averred by the SBI that cause of action firstly arose in the year 1992-93 when the DPS had admitted less number of students on the recommendation of the SBI against the reserved seats. Thus, when the cause of action arose, as per the plaintiff bank, firstly in the year 1992-93, suit should have been filed within three years thereafter. However, attempt was made to bring the suit within limitation by alleging that cause of action lastly arose on 28.8.1995 when the DPS refused to perform its part of the obligation under the agreement. Period of three years is to count from the date when the cause of action first accrues as per the limitation. When for the first time DPS did not act under the said agreement, it is then that the right to sue accrues and the limitation starts running. Therefore, limitation period could not start from 28.8.1995 but from 21.10.1992 even as per the plaint. The learned trial court, therefore, rightly held that the suit filed on 3.3.1998 was time barred.

Even on merits, we are inclined to agree with the findings recorded by the learned trial court on the basis of legal position explained therein.

The agreement dated 26.10.1983 (Ex. PW 1/1), inter alia, records that the SBI has "donated" Rs. 18 lakhs to the defendant school subject to the condition that school would reserve 150 seats as mentioned above. Whether such payment can be treated as "donation" when the plaintiff bank wanted counter obligation on the part of the school in lieu of payment of said amount. However, in the present case, payment of Rs. 18 lakhs was not gratis but against pre-defined benefit. It was not without any recompense or claim as the plaintiff bank wanted the defendant school to return some favour. Therefore, the learned trial court rightly opined that the amount of Rs. 18 lakhs was not a ''donation'' in its true sense. It was, in fact, a transaction between the bank and the school whereby the bank agreed to provide help in lieu of reciprocal promise/obligation on the part of the school.

Can there by an agreement between the school and another person whereby the school agrees to give admission to some students against payment of money described as ''donation'' or given any other nomenclature. We make it clear that we are examining this question in the context of admission of students in recognized schools in Delhi, which are governed by the provisions of the Delhi School Education Act, 1973. Admittedly, the respondent school is a recognised school to which provisions of the said Act do apply.

Precisely, this very question came up before the Apex Court in State of Gujarat and Others Vs. Meghji Pethraj Shah Charitable Trust and Others, . Following its earlier nine Judge Bench decision in Unni Krishnan, J.P. and others Vs. State of Andhra Pradesh and others etc. etc., , the Court observed that although it did not wish to express any opinion on the question whether the right to establish an educational institution could be said to be carrying on any "occupation" within the meaning of Article 19(1)(g) of the Constitution, though it could be so, it was of the definite opinion that such activity can neither be a trade or a business nor can it be a profession within the meaning of Article 19(1)(g). It also opined that commercialization of education was not permissible and the intention of the Parliament was manifest, namely, no person shall be allowed to steal a march over a more meritorious candidate because of his economic power. That was also a case where 10% of the total seats were reserved for the donor, which was subsequently reduced to fixed seats numbering 12 per academic year. The Court held that this was not permissible and made following pertinent observations in the process:-

In the scheme evolved in the said judgment, it is expressly directed that all students admitted in a private professional college shall be selected exclusively on the basis of merit, both in the category of merit (fee) seats as well as payment seats. In the case of such private professional colleges, an expression was made to the extent of 5% of the seats for accommodation the NRI/foreign students in view of the orders and policy of the Government of India to encourage such students. It has also been directed expressly that "there shall be no quota reserved for management or for any family, caste or community, which may have established such college." If this is the position in the case of professional colleges established and administered by private bodies, it is inconceivable that in the case of a college established and run by the government, any admissions can be made otherwise than on merit or any quota can be reserved for any person, family or Trust, which may have assisted monetarily in establishing the college. The government is not precluded from accepting donations from charitable-minded individuals or organizations but it cannot certainly enter into an arrangement or a venture or the kind concerned herein. In this case, the payment was more in the nature of a deal whereunder Sri M.P. Shah obtained in return an enduring benefit till the college lasts. It was not even a case, where the government unilaterally offered something out of gratitude for such "donation"-not that we are saying, that such a thing would be legal. Now, where an individual or an organisation which establishes and runs a medical college (recognized by State or affiliated to a university) is not entitled, according to Unnikrishnan, to admit students or its own, or in its discretion, it is inconceivable that a person or a body which has assisted in setting up of a government medical college would be permitted to have a quota of its own to which it can nominate students of its own choice. There is no room for an arrangement in law. We are, therefore, of the opinion that the reason given by the Government of Gujarat in its communication dated June 22, 1993 for terminating the said arrangement is a perfectly relevant, legitimate and valid reason. It was bound to do so in law and it has done so. No exception can be taken to the said action.

It was conceded that Rule 145 of the Delhi Education Rules govern the matter relating to admissions to recognized unaided schools in which category the respondent school falls. This provision is reproduced below:-

Admission to recognised unaided schools

(1) The head of every recognised unaided school shall regulate admissions to a recognised unaided school or to any class thereof either on the basis of admission test or on the basis of result in a particular class or school.

(2) Subject to the provisions of sub-rule (1) the provisions of this Chapter shall, so far as may be, apply to admission to a recognised unaided school as the (sic.) to admissions to an aided school.

The criterion laid down in the aforesaid Rule is that admission in a school should either be on the basis of admission test or the result in a particular class or school. It does not provide for entry into school by giving donations. Rule 145 of Delhi Education Rules is a regulatory measure ensuring that recognized unaided schools shall maintain minimum standards in respect of admissions. That is to say, the same shall be based on merit which is to be determined on the basis of admission test or on the basis of result in a particular class or school. There would, thus, be no Rule to reserve the seats for the donors in lieu of donations. Providing of such a channel is thus, antithesis to Rule 145. The instant case is another facet of commercialization of education, which cannot and should not be permitted. Such commercialization, in light of our education standards, is detrimental to the interest of our society; thus opposed to public policy it is thereby obligatory - in the interest of general public - to ensure not only education of requisite standards but also fairness in admission.

Giving of donation to an educational institution would be permissible, however, entering into an agreement whereby the school is to give preference to the wards of the donor for the purpose of admission is an example of inequity. And therefore the maxim Quando a liquid per se non sit malum, tamen si sit mali exempli, non est faciendum (When anything by itself is not evil, and yet if it is an example for evil, it is not to be done) would squarely be attracted in the present case.

When underlying message in Rule 145 is to give admissions on the basis of merit to be tested, in any of the form stipulated in the said Rule, making such a provision providing back door entry would definitely be opposed to public policy and such an agreement would be hit by Section 23 of the Contract Act, which reads as under:-

What consideration and objects are lawful and what not.-The consideration or object of an agreement is lawful, unless-

It is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law, or is fraudulent;

Involves or implies injury to the person or property of another or the Court regards it as immoral, or opposed to public policy.

What meaning would be ascribed to ''public policy'' when the Contract Act does not define this expression? In Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, , the Supreme Court while holding that this expression was not capable of precise definition, nevertheless gave some guidelines to find out what public policy would mean. For our purposes, we may extract the following quote there from:-

Contract Act does not define the expression "public policy" or "opposed to public policy." From the very nature of things the expressions "public policy", "opposed to public policy", or "contrary to public policy" are incapable of precise definition. Public Policy, however, is not the policy of a particular Government. It connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest has varied from time to time. As new concepts take the place of old, transactions which were once considered against public policy are now being upheld by the Courts and similarly where there has been a well--recognized head of public policy, the Courts have not shirked from extending it to new transactions and changed circumstances and have a time not even flinched from inventing a new head of public policy. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the Court must in consonance with public conscience and in keeping with public good and public interest declares such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority Courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the Court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in the Constitution.

We are living in a world of commercialization--everything has a price tag and conspicuous consumption appears to be the way of the western world. The media and politicians remind us that our educational system must prepare our students to be competitive in a global economy. To discuss commercialization in education, we must place it in the current social and economic context. "...The organization of the school, as it is presently constructed, institutionalizes consumer materialism" (Boyles, D. (1998). American education and corporations: The free market goes to school. New York: Garland Publishing, p. 4). One result has been a growth in the number and types of partnerships between schools and corporations. We may disagree whether this is the way things should be, but it is the way they currently are, and this presents a challenging conundrum for educators. (Scrum, L (2002). Education and commercialization: Raising awareness and making wise decisions. Contemporary Issues in Technology and Teacher Education [Online serial], 2(2), 170-177).

The seriousness of this issue is clear. Kozol declared, "When business enters education...it sells something more important than the brand names of its products. It sells a way of looking at the world and at oneself (Kozol, J. (1992). Whittle and the privateer America''s schools. New York: Harper Perennial.?. 277). As a society, we must decide if we wish our children to grow up believing commercialism is a normal way of life, or if we can encourage our students to think in other directions. Put another way, do we want public schools to be promoting concern for the public good, or for materialistic attitudes (McCarthy, M.M. (1995). Private investment in public education: Boon or boondoggle? Journal of School Leadership, 5(1), 4-21).

In few cases before Supreme Court question of seeking admission on the basis of donation/capitation fees came up for consideration but those cases relate to higher education on the principle that it is well established all over the world that those who seek professional education must pay for it. However the position would be different for elementary education. According to the Constitution (83rd Amendment) Act, 1997 elementary education is a fundamental right of all children between 6-14 years. Keeping in view the above constitutional mandate, the learned ADJ in its well-considered and ably-written judgment, looked into the matter and remarked as under: 13. Needless to say that ''education'' has been included in the list of fundamental rights by adding Article 21A of the Constitution. Under our Constitution reservation is permissible in higher education for weaker sections of the society and for other groups, which deserves special treatment but there is no provision in our Constitution for reservation in the school level education because school level education is the fundamental right of the children of the country. Thus, in my opinion the impugned agreement is also contrary to the scheme of the provisions of our Constitution.

We agree with the aforesaid observations. We, therefore, do not find any infirmity with the impugned order passed by the learned ADJ and dismiss the appeal.